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Fuel Cost Small Business

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									                              Skyrocketing Fuel Costs Impact Everyone
                                        In General Aviation

There’s no question that fuel costs are adversely impacting organizations and small
businesses using general aviation. Historically, the general aviation community has paid
nearly twice the price for fuel than that paid by the commercial airlines. The impact of
continuing price increases on the industry is visible in all parts of the country, and
businesspeople are struggling to grapple with the situation.

General Aviation Fuel Sales Down Significantly

Reports from major fuel providers and charter companies show that as fuel prices have
spiked, consumption and use are declining significantly. A recent survey of operators from
across the country found:

    •    Purchase of Jet-A fuel has fallen by 10% to 20%.
    •    Purchase of AvGas has dropped by 30% to 40%.

General Aviation Activity Declining, Behaviors Changing

Fuel costs are changing operational behaviors, The Federal Aviation Administration (FAA)
recently reported that activity at general aviation airports is down significantly, and as an
example cited operations at Springfield, IL, which had declined 30%.

An aviation consulting group conducted a recent informal survey of fixed base operators
(FBOs) at general aviation airports. It found that the vast majority (98%) of those who
continue to fly cite rising fuel costs as a concern, and are taking measures to minimize
consumption. Among those surveyed:

    •    28%    request more direct routings;
    •    15%    have started tankering fuel;
    •    40%    reported flying at slower speeds to save fuel;
    •    19%    have cut back on hours flown, and;
    •    76%    reported customers switching FBOs to find lower-priced fuel.

Fuel Costs Hitting Across the Board

Eighty-five percent of the companies that utilize business aviation in the United States are
small and mid-size businesses, representing many different types of industries. There’s no
question that the impact of rising fuel costs is being felt in all corners of the nation’s
economy.

    •    A top-tier fractional provider recently announced layoffs due to fuel costs and
         reduced flying.
    •    FBOs on average now participate at about four fuel card or fuel discount programs to
         save money for their own flight operations and those of their aviation customers.
    •    The challenges prompted by soaring fuel costs aren’t limited to the marketplace.
         Philanthropic organizations that rely on general aviation aircraft are straining under
         the weight of increased fuel costs.

In summary, rising fuel costs are having the same adverse impact on general aviation,
including business aviation, that is being experienced by other transportation sectors.



NBAA: Skyrocketing Fuel Costs Impact Everyone in General Aviation                          1 of 3
    In Their Own Words: NBAA Members Are Struggling With Fuel Cost Increases

Soaring costs are forcing businesses in NBAA’s Membership to cut back on flights and risk
losing business opportunities. Consider the following testimonials:

 “I used to [fly my plane to] visit every possible prospect in hopes of growing our business.
Unfortunately, because fuel costs make sales calls with the plane so expensive, I now only
make those calls I know in advance have a high probability of closing. Clearly, my firm is
missing important opportunities and suffering as a result. Deciding when to fly to meet with
a potential customer is a tough call when you are a small business located in a place with
little or no commercial air service.”

                                     Bryan Currier, president of NBAA Member Company Advantage
                                     Technologies, Inc., a Troy, MI-based medical information technology
                                     (IT) consulting firm with 18 employees.

“Fuel is by far the largest expense for me. When I do my flight planning, I look for the
FBOs with the least prohibitive fuel costs, and the airports with those FBOs are the ones I
fly into. My real estate clients expect me to see the sites I’m selling first hand, and if I can’t
fly to those sites, it’s much harder to handle that aspect of my business, especially since
most of the markets involved don’t have robust airline service. If fuel costs go up
substantially, my business will be adversely impacted, and some opportunities will literally
be eliminated.”
                                     Paul Stafford, a commercial real estate investment specialist with
                                     NBAA Member Company Pentad Properties, based in Missoula, MT

“We need the company King Air turboprop to visit our construction sites through Virginia
and the Carolinas, so we can meet with employees and customers to assure them in these
trying times. However, fuel costs are going through the roof, and if they continue to rise, we
may lose out on trips like these.”
                                     Scott Moore, chief pilot with NBAA Member Company Luck Stone, a
                                     family-owned building company in Richmond, VA.

“We rely on our turboprop airplane to help us cast a wide net to find new scrap metal
providers and remain in close contact with existing providers. Fuel cost is a major concern
for me. I spend a huge amount of time fuel planning to ensure I get the best possible price
I can. I check three or four different airports to find the lowest fuel costs. At current
prices, we just can’t afford not to devote time to fuel cost-mitigation strategies. Manitoba
Recycling can’t survive and grow without the plane but with fuel prices so high, we can’t
afford to fly as much as we really need to.”
                                     Richard Shine, president of NBAA Member Company Manitoba
                                     Recycling, a family-owned scrap recycling business based in Lancaster,
                                     NY.

“Fuel prices are breaking our back; our charity has literally gone broke because of fuel
prices. There is no question that if fuel costs continue to rise, then our mercy missions will
significantly fall off, and we’ll be leaving behind people in need of access to major medical
centers.”
                                     Cody Welch, president and founder of NBAA Member Wings of Mercy, a
                                     Linden, MI-based 501(c)(3) non-profit provider of air transportation
                                     for patients needing treatment at distant medical facilities.

“Over the past three months, fewer volunteer pilots in my organization have been able to fly
Lifeline flights because of rising fuel costs. Many of these pilots, who are either self-
employed or fly for a small business have had to cut back on their flying, resulting in less
flights for patients who need specialty medical care but cannot afford to reach the hospitals
and treatment centers. High fuel prices will continue to be a major issue for charitable
organizations across the country in the coming months.”

                                     Keith Laken, President of the Peoria, IL-based Lifeline Pilots.


NBAA: Skyrocketing Fuel Costs Impact Everyone in General Aviation                                         2 of 3
                              Media Organizations Are Reporting on the
                              Impact of Fuel Costs on General Aviation
 
“At Cobb County's McCollum Field (KRYY), a gallon of aviation fuel is $5.95. In-town at
Fulton County Airport, it jumps to $7.43. Prices that high are keeping some planes
grounded. According to FAA statistics, in May of last year, McCollum field saw more than
5,000 take offs and landings of locally based aircraft. For this past May, that number fell to
about 2,800. ‘We've lost a handful of customers this year who've ended up selling their
aircraft,’ says Andrew Ash who manages Preferred Air Service at McCollum Field. ‘For those
that are still here, you see a lot of them, again, that are scaling back. You know, they're
really watching it. I think everyone's really hedging themselves to just sit tight for a while.’”
                                       - WABE-FM Atlanta, GA July 15, 2008

“Most business-jet customers pay attention to fuel costs-especially because these planes
increasingly are being bought by cost-conscious intermediaries such as charter, air-taxi, and
fractional-ownership companies. ‘Because of rising fuel costs, fuel efficiency has suddenly
become an issue for business jet owners,’ says John Rosanvallon, CEO of Dassault Falcon.”
                                   - Business Week July 16, 2008

“SheltAir, a fixed-base operator at Jacksonville International Airport, has seen a 10 percent
to 15 percent reduction in business in the past four months, largely due to the decrease in
fuel sales…Sales of Jet A are down 10 percent to 20 percent, and sales of aviation fuel are
down 30 percent to 40 percent, said Dan Hubbard, a spokesman for the National Business
Aviation Association. Doing business through online meetings and teleconferences is also
becoming more attractive.”
                                     - Jacksonville Business Journal July 14, 2008

“National Air Transportation Association spokesman David Almy said national sales averages
of avgas are down anywhere from 10 to 50 percent, pointing to a softening general aviation
market.”
                                    – Aero News July 7, 2008

“Central Florida's general aviation airports and related businesses are experiencing sharp
drops in fuel sales and the number of flights, due to soaring fuel prices and a tight
economy. Operations - takeoffs and landings - declined a combined 11.3 percent through
the first five months of the year at Orlando Executive, Kissimmee Gateway, Orlando Sanford
International, Orlando International and Daytona International airports. Meanwhile,
combined fuel sales at those four airports nose-dived 6.75 percent.”
                                     - Orlando Business Journal July 7, 2008

“Record oil prices are affecting recreational pilots, the sales of small used aircraft and the
sale of aviation gas and jet fuel. ‘People in general aviation... are subject to the sluggish
economy and high fuel costs just like everyone else,’ said Dan Hubbard, a National Business
Aviation Association spokesman.
                                      – The Wichita Eagle July 6, 2008

“The plunge in fuel sales results in a drop in takeoffs and landings at some general aviation
airports. Pilots have also switched their fixed-base operators based on the prices charged
for fuel; are flying at slower, more fuel-efficient speeds; and taking more direct routes to
their destinations… In the greater Valley region, Van Nuys operator Clay Lacy estimated his
fixed-based facility has been selling 25 percent less in fuel to private owners, compared to a
year ago. In Camarillo, Steve Lassetter of Sun Air Jets, reported an increase of $1.60 per
gallon in the cost of jet fuel since January.”
                                       - San Francisco Valley Business Journal June 23, 2008




NBAA: Skyrocketing Fuel Costs Impact Everyone in General Aviation                            3 of 3

								
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